2-Week Highway Extension Passed; Fed Rate Hike Momentum Grows

More evidence pointed toward a December hike in interest rates and the Senate bought congress more time to work out the details of a long-term highway/transit funding bill.

Fed Rate Hike Highly Expected

Data showed fewer Americans filed for unemployment benefits last week, further supporting the view that the Federal Reserve will raise interest rates in December after seven years near zero.

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Commodity markets should brace for another sell-off and lower prices if, as is widely expected, the Fed tightens policy in December and the dollar strengthens further. One reason is production, much of it in non-dollar countries such as Chile and Russia, where a higher dollar means rising revenues in pesos and rubles, respectively. It also means lower wage costs, paid in local currencies, allowing non-US producers to cope with falling prices.

Highway Trust Fund Extended Two Weeks

As the House and Senate continue to iron out differences on a multiyear highway bill, the Senate gave negotiators breathing room by extending the fund that pays for federal highway projects. The Highway Trust Fund would have lapsed today but now will last through Dec. 4.

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The chambers differ over funding levels for the highway bill, with the House proposing a status quo $325 billion bill and the Senate supporting an increase with an estimated $355 billion.

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